Auctions as an Allocation Mechanism in Academia: The Case of Faculty Offices

Abstract

A six-story addition to Arizona State University's College of Business was completed in 1983, causing entire departments to be uprooted and relocated. Faculty offices had to be reassigned as a result. What seemed to be a trivial problem, the allocation of offices, turned out to be a very complex one. This is the story of how that problem was resolved. The chairman of the Economics Department decided to rely on an auction as the allocation mechanism. The experiment was a raging success until the story was picked up by the school newspaper, the Phoenix media, and then by media elsewhere. The university administration was not able to deflect the allegation that public property had been sold. It was due only to the fact that the money collected had gone into a scholarship fund that the controversy eventually dissipated without serious recriminations. Since the initial reallocation in 1983, the negative aspects of the experiment have virtually disappeared and even the central administration now appears to think it novel and interesting.